Second-price auction tournament B Jason F. Shogren a, * , Gregory M. Parkhurst b , Christopher McIntosh a a Department of Economics and Finance, University of Wyoming, Laramie, WY 82071-3985, United States b Department of Agricultural Economics, Mississippi State University, Mississippi State, MS 39762, United States Received 16 November 2004; received in revised form 4 January 2006; accepted 6 January 2006 Available online 2 May 2006 Abstract We compare bidding behavior in a standard second-price auction and a second-price auction tournament without information on relative rankings. Our results suggest that people bid more sincerely in the tournament setting with a non-linear payoff schedule and incomplete information. D 2006 Elsevier B.V. All rights reserved. Keywords: Auction; Experiments; Tournaments JEL classification: C9; D44 1. Introduction Vickrey’s (1961) second-price auction has three attractive properties: the auction is weakly demand-revealing in theory, bidders set the market-clearing price, and the allocation and cost rules are easy to explain to bidders. However, whether bidders understand these rules in practice is another question. Evidence from the lab suggests that bidders do not always bid 0165-1765/$ - see front matter D 2006 Elsevier B.V. All rights reserved. doi:10.1016/j.econlet.2006.01.020 B We thank the ERS/USDA for partial financial support. Thanks to the reviewers, the editor, Peter Frykblom, Shelby Gerking, and participants at seminars in Central Florida, Colorado, Nebraska, Michigan, and Michigan State for their helpful comments. All errors remain our own. * Corresponding author. Tel.: +1 307 766 5430; fax: +1 307 766 5090. E-mail address: jramses@uwyo.edu (J.F. Shogren). Economics Letters 92 (2006) 99 – 107 www.elsevier.com/locate/econbase